On June 21, 2010 GMAC will be offering financing incentives on their REO properties.   This program will help buyers save some money on fees and services when buying a REO in Big Bear that is owned by GMAC.  Not all GMAC REO properties will qualify for this program.  When I get new listing that do qualify, it will be noted in the MLS and I will have informational packages at the properties.  As always, I am available by phone or email to answer any questions that come up regarding this new and exciting program.


SAVINGS

            One Year Home Warranty at no charge
            No Pre Approval Fee
            No Loan Application Fee
            No Charge for Credit Report
            No Appraisal Fee

  

Qualifying Loans


              Conventional Loans  (Fixed or Adjustable)
           FHA  (Fixed and Adjustable)
          VA    (Fixed and Adjustable)
          Jumbo     (Fixed and Adjustable)


There is going to be a lot more information coming out in the coming days.  As GMAC provides me with the information, I will be posting it on this blog.

You can contact me anytime by phone or email my phone number is 909 436 8043 and my email is tony@tonycard.com

The Big Bear Valley is expecting the number of bank-owned REO properties to rise in the summer of 2010. Here are 7 Tips that can help you snag a bank-owned property.

First- Hire an REO expert with experience buying and selling bank-owned properties in the Big Bear Valley.  I am that expert

Avoid lowball offers. Since most bank-owned properties in Big Bear are being sold at list price or above, a lowball offer will not work. Consider submitting an offer slightly above list price.

Determine the value of the property. You make your money when you buy and not when you sell. I can help you become an expert in the Big Bear market so you can recognize a bargain instantly when you see it. Also have an inspector and contractor evaluate the property and itemize all the repairs that need to be made. Subtract the cost of these repairs from the estimated value.

Submit a complete package. Each lender has certain guidelines for submitting offers on property in Big Bear.  When you arrive in Big Bear to look at property, be prepared.  Bring proof of funds if you plan on paying cash, a bank account balance statement works well for this. If you need to take out a loan, bring your pre qualification letter and your check book.

Write multiple offers. Don’t expect your first REO offer to be accepted. Competition is fierce for Bank Owned, REO property in Big Bear. Be prepared to write multiple offers on different properties before you land one.

Prepare for counteroffers. Banks will often send you a counteroffer at a higher price. You may be willing to raise your price slightly with the first counteroffer, but if a second counteroffer comes in, respond with your “best and final” offer.

Be prepared to walk away. If the bank doesn’t accept your offer or you’re unwilling to raise the price during the counteroffer period, be prepared to walk away and find another deal.

On my last blog I discussed the Home Inspection process in Big Bear and today I thought I would take it one step further and discuss who is responsible for paying for repairs that came up in the home inspection.

There are a number of buyers that think that after getting a home inspection, they then expect the seller to make all of the repairs that came up as a result of the inspection.  In trying to shed some light on that subject, let’s examine a few things.

What is required of the seller in order to sell a home in Big Bear?

The California Residential Purchase Contract states that the only thing a seller is required to do to his house in Big Bear, or anywhere else in California for that matter is to strap the water heater and make sure that there are working smoke detectors in the bedrooms.   That is ALL that the seller is required to do in order to sell a house in Big Bear.

What is the purpose of the Home Inspection?

The purpose of the home inspection is to give the buyer a better understanding and overview of what they are buying.  You may have picked out the best looking cabin in Big Bear, but by letting the home inspector take a look at the place, you may find out that there are plumbing leaks, electrical problems, roofing issues, and so on.  By letting the inspector go through your choice of properties in Big Bear, you then know what the true condition of the property is.

What do you do with the inspection report once you have it?

Once the inspector has completed his work on your dream home in Big Bear, he is going to issue you a report that explains all of his findings.  Once you’ve read and understood the report, what do you do with it?  Again, the report is to give you, the buyer a clear understanding of the condition of the property.  Some buyers think that after spending $250.00 to $300.00 for the report, that they should then turn the report into a Fix It List for the seller.  This is truly a misconception. 

Will the seller pay for any repairs?

The Purchase Contract gives the buyer the right to do the home inspection and to ask the seller to make repairs.  As I stated at the beginning of this blog, the seller is not required to make any repairs other than to make sure that there are working smoke detectors in the bedrooms and to have the water heater strapped.  After being presented with a repair request, the seller may or may not agree to make any of the repairs that you, the buyer are asking for.  Normally, if the seller agrees to make repairs, the buyer will then sign off the inspection contingency and move forward with the close.  If the seller refuses to make any repairs, then the buyer has to decide whether to move forward with the close and buy the property as is.  If the repairs are too extensive and the seller won’t make any of the requested repairs or offer some sort of credit to the buyers, then the buyer can simply back out of the deal. 

 

When it comes to buying a home in Big Bear, the question of why have a home inspection and who pays for it comes up quite frequently. Let’s take a few minutes and address both of the commonly asked questions that I get.

Who pays for the Home Inspection?

The home inspection isn’t a required inspection in Big Bear, but it is highly recommended. As it isn’t a required inspection, the buyer would be responsible for paying for the home inspection.

How much does the Home inspection Cost?

The cost of the home inspection on a home in Big Bear will vary depending on the size of the home.  Most home inspectors that I deal with base their fee off of the square footage of the property.  Unless you are looking to buy something rather large, the cost of the home inspection will generally run you somewhere between $200.00 and $250.00

How do I choose my Home Inspection?

If you look in the local yellow pages in Big Bear or anywhere else for that matter, there will be a long list of home inspectors. So, who do I choose?  The first thing I would do as a buyer is to ask my Realtor who they recommend for the inspection.  Generally, your Realtor is going to have some recommendations for you.  If you find yourself looking on your own, then you want to look for two important things.  The first question that you want to ask the home inspector is if he is a licensed general contractor.  Being a licensed General Contractor is not a requirement in Big Bear but I would think that you want someone working for you that know what he is looking at.  The second thing that I would ask the home inspector is this.  Do you have Errors and Omissions Insurance?   Otherwise known as E & O Insurance.  No matter how good the home inspector is, he is still human.  Even the best will miss something every now and then.  By carrying E & O insurance, he is well covered in the event that he misses something and it turns out to be something serious.  I have guys come in and tell me that they are doing home inspections and they are asking for my business.  My first question is this.  Do you have E & O?  Most simply say NO, while others ask me what E & O is!  I thank them but explain why I won’t be recommending them to my clients.

Why spend the money on a Home Inspection?

When you buy a cabin in Big Bear, the owner is suppose to fill out a number of different disclosures, answering truthfully about the condition of the property.  What if you buy a bank owned REO property where there are no disclosures?  You need to find out what the true condition of the cabin is and you really need to have that done by an uninterested qualified third party.  You wouldn’t buy a car without taking a test drive and you shouldn’t buy a home without having it thoroughly inspected by a licensed professional. A home is a large investment and it is imperative you know what you are getting yourself into. I’ve sold new constructions that have a list of things wrong with them. How would we have found out without the home inspection?  It doesn’t matter if it is a brand new home or one built in 1930, you need to get a home inspection. 

If you’re going to buy a home in Big Bear, or anywhere else for that matter, get a Home Inspection!

My Yorkies are 6 weeks old as of May 23, 2010  I have one female pureberd that I am selling.  She has no papers but is a purebred.  The asking price is $600.00 or best offer 

Please contact me at 909 436 8043 for more details

Long gone are the 5% and 0% down home loans in Big Bear.  If you don't have at least 10% or your down payment, most people look towards an FHA backed loan.  A FHA backed loan allows you to get into your primary residence with as little as 3.5% down.  However, if you're looking for a home loan for a second home in Big Bear, FHA probably won't work for you.  What other options are out there?

Have you heard of Fannie Mae?  Fannie Mae buys home loans from banks and ended up owning a lot of property in Big Bear after the housing bubble burst, Fannie Mae is not in the business of owning homes.  They wanted these homes sold and sold quickly.

Fannie Mae recognized the need for an alternative to FHA financing on homes that they own.  As a result of this, they now offer low down financing through the Home Path Financing and Home Path Renovation Financing Programs. Remember, these programs are only available for homes owned by Fannie Mae. 

If you are looking for a deal on a property in Big Bear, give me a call and ask me about seeing some of the Fannie Mae properties that we have for sale.  You will find that the price is very attractive and the financing terms are some of the best out there.

· Low down payment and flexible mortgage terms (fixed-rate, adjustable-rate, or interest-only)

· You may qualify even if your credit is less than perfect

· Available to both owner occupiers and investors

· Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer

· No mortgage insurance*

· No appraisal fees

Fannie Mae doesn't pay ANY closing costs but they offer a credit based off of the purchase price of 3.5% that the buyer can use to cover the closing costs.  In most cases, the 3.5% will cover both buyer and seller closing costs

Long gone are the 5% and 0% down home loans in Big Bear.  If you don't have a lot of money for the down payment, most people look towards an FHA backed loan.  FHA will let you get a loan with 3.5% down.  However, if you're looking for a home loan for a second home in Big Bear, FHA probably won't work for you.  What other options are out there?

Have you heard of Fannie Mae?  Fannie Mae buys home loans from banks and ended up owning a lot of property in Big Bear.  When the housing market bubble burst, Fannie Mae ended up holding title to a ton of homes and they want them sold.

As a result if this, Fannie Mae offers financing on homes that they own through the Home Path Financing and Home Path Renovation Financing Programs. These programs are only available for homes owned by Fannie Mae. 

If you are looking for a deal on a property in Big Bear, give me a call and ask me about seeing some of the Fannie Mae properties that we have for sale.  You will find that the price is very attractive and the financing terms are some of the best out there.

· Low down payment and flexible mortgage terms (fixed-rate, adjustable-rate, or interest-only)

· You may qualify even if your credit is less than perfect

· Available to both owner occupiers and investors

· Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer

· No mortgage insurance*

· No appraisal fees

· Also eligible for Home Path Renovation Mortgage

Fannie Mae doesn't pay ANY closing costs but they offer a credit based off of the purchase price of 3.5% that the buyer can use to cover the closing costs.  In most cases, the 3.5% will cover both buyer and seller closing costs

 

While sitting at my desk the other morning, I received a phone call from a very anxious and nervous client of mine.  Why was he so nervous and anxious you ask?  He came to Big Bear to work on the small fixer cabin that he had purchased and found a note posted on the window stating that the bank was foreclosing on the property.  His first question to me upon arriving at my new office was How could this happen?  I paid CASH for the cabin. 

Knowing that we weren’t going to be able to deal with any of this until my client had calmed down, my first objective was to get him calmed down so that we could focus on the problem.  After all, how often do you arrive at your Big Bear cabin and find a Notice of sale from the bank posted on your property.

Once he calmed down and we started looking in to the issue, it was obvious that the bank made a mistake and posted the wrong Big Bear property.  As simple as it seems, they should have posted the property next door.

Before I called the agent who posted the house, I did some research and found that this particular agent had no experience in Big Bear and in fact has been a licensed Real Estate agent for less than year.  This is just one more reason that these banks should use a local agent who knows the area when dealing with the REO properties.

When I called the agent who posted the cabin in Big Bear, I expected to have a calm and rational conversation.  In my mind, I expected to be able to explain to her where she made the mistake and it would be easily rectified. Boy was I wrong!  The first comments from the other agent were that my client had made a fraudulent purchase and had a fraudulent title!  This statement was made before she looked at anything. Instead of a calm and rational discussion, I was yelled at and then hung up on.  It wasn’t until I was able to speak to the broker later on in the day that we were able to get them to see that they had in fact, posted the wrong property.  My client left the office feeling much better than he felt when he called me early yesterday morning. 

This situation made me sit down and wonder how many times this happens throughout the United States.  I did some research on the issue and was surprised to see that this isn’t an uncommon problem at all.  In the cases that I read about, the one common denominator in each case was that the agent posting the REO property was from out of the area.  When will these out of area banks understand that the whole REO transaction will go much smoother if they contact a local agent and deal with them?

Please feel free to contact me at tony@tonycard.com with any questions.  While I specialize in the Big Bear area, I am available to answer any questions that you may have.

Have you ever said to a friend or family member that you would love to buy a cabin in Big Bear if the prices were lower?  Up until a couple of days ago, you could buy a cabin in Big Bear for as little as $38,450.00  That cabin is has sold and is currently in escrow but there are still a number of other homes for sale below $100,000.00  The least expensive home currently for sale in Big Bear is only $49,900.

I thought I would pick out a few cabins throughout the Big Bear Valley that are all good deals and listed well below the $100,000.00 mark.  While there is a large selection of homes, both resale and REO in Big Bear for under $100,000, I am only going to select a few for this blog.



Fall in love with this quite treed setting in Erwin Lake.  Priced at $79,350, you will find a  Clean 2 bedroom 1 bath REO cabin with spectacular views of the open meadow.  This is a Fannie Mae property and has some very attractive financing options with Homepath Financing.  This listing is courtesy of Coldwell Banker in Big Bear.



Century 21 listed this little studio cabin for $49,900.  This small 3 room cabin is only 388 square feet and it sits on a 2500 square foot lot.  While the 2500 square foot lot is small, there is still plenty of room to build on to this cabin.  At the presnt time, this is the least expensive cabin for sale in all of Big Bear.

538 Victoria has been listed by Realty Exec for $74,900.  Don't let the outside fool you.  This REO has wood floors throughout, large rock fireplace, and features 2 bedrooms and 1 bath.  This is one of the cleaner cabins that I've seen in this price range.  There is plenty of room between you and the neighbor as the home sits on a 4750 square foot lot.

These three homes are just a small sample of homes for sale in Big Bear that are priced under $100,000.  If you would like a customized list of homes that fit your needs, please email me at tony@tonycard.com or give me a call.  My office number is 909 866-5348 and my cell is 909 436 8043

I went out to preview a bank owned, REO property today in Big Bear that I planned to show to a client tomorrow.  According the Multiple listing Service, this property fell out of escrow and came back on the market.  The details in the listing did state that the purchase of the home was subject to the successful cancelation of the previous escrow.  I've seen this verbiage before in listings that come back on the market in Big Bear, but I've never had any problems from them.

To start off with, this REO cabin was back off of the beaten path and was very difficult to locate.  The navigation system in my vehicle was of no help as it didn't even recognize that I was on any type of road.  I finally found the REO in an area that I would call Toad Butt Arizona!   Upon arriving, I was surprised to see the property wide open and work being done on it.  As this was a bank owned, REO listing, my first thought was that the bank was having some work done to the property.  I had no idea why it fell out of escrow but thought that perhaps something significant came up during the previous escrow and the bank was fixing it as to avoid losing anther escrow.  Boy was I wrong!

As this property was in a very isolated area and no numbers were visible on the REO, I asked the person working on the property if I had the right address.  He informed me that I had the correct property but wanted to know why I was there.  Once we started chatting, I learned that the person working on the property was the individual who was trying to buy the property.  What was very surprising to me was that this guy had no idea that the escrow was being cancelled.   He called his agent and was reassured that everything was on schedule and they were going to close the escrow.  I didn't say any more as I was a little confused, but previewed the property and left.  Once I left the property, I called the listing agent to find out just what was really going on!  I was assured that the property was in fact for sale and that the bank was accepting offers.

What puzzled me out of all of this was first off,  was why wasthis guy working on a home that he didn't own and second, what was this buyer doing at a home without the agent present?  
 

Now I've had clients want to have early access to properties and I have always said NO.  To let a buyer have access to a property before it closes escrow puts a tremendous amount of liability on the broker.  But to take it a step further and allow the buyer to work on the property before it closes escrow is crazy. The addednum that the bank makes the buyer sign normally states that there is to be no work done on the REO until it closes escrow.   As an agent, you are putting your own license in jeopardy along with causing serious liability issues for your broker if you allow someone to have access to a home before the close of escrow and something went wrong.  What would happen if the guy was doing some plumbing work and accidently caught the house on fire?  Once the bank found out that the buyer was working on the home and he was there without his or her Realtor, well there would be hell to pay.  There would be questions like, how did you get the access code?  This would all come back on the Realtor and the broker.  For an agent to give your unfettered access to a property in Big Bear without being there is a big No No.  What was the agent thinking?

While it is obvious that I strongly disagree with what was going on at this property in Big Bear.  I plan to keep it to myself and go from there.  When my client arrives, I'll be showing the property and if all goes well, sell the property.

Tony Card is an experienced Realtor in Big Bear Lake, CA who specializes in bank owned, REO properties and Short Sales.  If you ever have any questions about what is going on in the Big Bear Real Estate market, please email me at tony@tonycard.com or call me at 909 436-8043

Previously posted on Activerain

Clients of mine just closed escrow on a property that was being sold by a private owner.  While the clients ended up buying a cabin in Big Bear from a private party, they originally came to buy a Bank Owned, REO.  This couple came to Big Bear with the intention of buying a bank owned, REO and never gave a thought to buying a cabin from a private owner.  I met these people at the REO one afternoon and after viewing the home, they decided to make an offer.  Most REO properties in Big Bear have multiple offers on them and this cabin was no exception.  Even though the clients wrote a very strong offer, I was informed that they were not the best offer.  They were very disappointed to learn that the cabin that they thought was their dream home would not be there's but they didn't give up.  I ended up showing them a home that was owned by a private party and they fell in love with it.  Escrow just closed and they are very excited to be the owners of a cabin in Big Bear.

This made me think about the differences between buying a home that is privately owned and a bank property, or REO.  Let's take a look at some of the differences.

Picking Escrow and Title

When you make an offer on a privately owned property in Big Bear you normally let the seller pick who title and escrow are going to be with.  Most of the time, the escrow and title are handled locally in Big Bear.

When you make an offer on a bank owned, REO property and it is accepted, the bank will want to select the title and escrow company.  The banks go out and find the lowest bidder and that is who they want to use for escrow.  In many cases, the escrow is much more difficult to deal with because the escrow companies that the banks use are so overloaded that they can't provide you with good service.  The state of California passed a law that stated that the bank cannot dictate to the buyer who would provide these services.  The banks are now forced to offer the buyer a choice of escrow and title companies.  The kicker is that while the buyer can select who he wants for title and escrow, the bank will force him to pay for both buyer and seller escrow and title fees if they select anyone other than who the bank wants.

Inspection Time Frames

Whenever you make an offer on a property in Big Bear, you use the California Purchase Contract.  That contract states by default that a buyer will have 17 days to do his inspections from the time of acceptance.  When dealing with a property owned by an individual, this is normally not countered out.

Whenever you deal with a bank owned, REO property, the bank is going to send you an addendum to the purchase contract and one of the many things that get changed is the inspection time frame.  Depending on whether you're an investor or just someone looking to purchase a second home, the bank will cut your inspection time frame from anywhere from 5 to 10 days.

Removal of Contingencies

As previously discussed, when you make an offer on a property owned by a private party, you are allowed 17 days to do your inspections.  At the end of that time frame you will be asked to sign off the inspection contingency in writing. 

Do you remember that addendum that I spoke of earlier?  Well here it comes again.  If you buy a bank owned, REO property, the bank is going to change the way that your contingencies are released.  Instead of being asked to sign off the inspection contingency at the end of 17 days, you lose the inspection contingency automatically at the end of your inspection time frame.  In other words, if you find a problem with the house, you must notify the bank in writing before the inspection time frame is over.

Repairs

The next step after the home inspection is complete is generally to ask the seller to do a few repairs.  When you buy the home from a home owner, the chances are very good that you're going to get some concessions when it comes to the repair request.

When you buy your cabin as a bank owned, REO cabin, you shouldn't expect much in the way of repairs.  The addendum is very specific that you are buying the home as is.  I'm not saying that you won't ever get a bank to make a repair concession but don't count on it.  I've sold many bank owned, REO properties in Big Bear and I've been able to get the bank to help out on the repair issues twice.  When you buy the bank owned REO, just think of it this way.  The home inspection is going to tell you what you're buying.  If you don't like what the report tells you, then get out of the deal and move on.

Disclosure

When you buy a property in Big Bear from a home owner, he will send over a stack of disclosures about the property. He is required to disclose to the new owner anything about the property that could affect the sale.

When you buy the bank owned, REO property, you are going to get very little in disclosures.  The reason for this is that the bank has never been in the home and knows nothing about its condition. 

 

I hope this blog has helped you understand some of the differences between buying a privately owned home in Big Bear and a bank owned, REO.  Keep this final thought in mind.  When you buy from a private party, you are going to have some leverage in the process.  If you buy a bank owned, REO property, you will quickly learn that the bank is in control.  You will play by their rules or you won't buy the home.

If you have any questions about buying a REO property or any questions about Real Estate in general, please feel free to contact me.  My cell number is 909 436-8043 or you can email me at tony@tonycard.com

Tony Card

Previously Posted on Activerain

Realtors are specialist, just like your doctor.  Would you go to a foot doctor if you had a heart ailment?   Of course not!  You would seek out a professional that specializes in the area of treatment that you need and then you would go and see him.  Then let me ask you this?  Why is it that you will risk your financial health by using an unqualified Realtor?  When you’re sick, you see the doctor who specializes in whatever it is that you have.  You seek their advice, you heed their advice and you get better.  Yet so many people will want to buy a second home in Big Bear and bring their Realtor buddy from their home town to help them.  Let’s take a look at this and explore why it’s a foolish thing to do.

Real Estate is Local

Just like the weather, Real Estate is local.  What is happening in the Real Estate market Laguna Beach or Apple Valley is not going to be the same as what is happening in the Big Bear Real Estate Market.  You’re Realtor from Orange County, while being an expert in Orange County is probably not going to know a thing about Big Bear.  He or she is not going to be able to honestly direct you to the better areas of Big Bear City and keep you away from the rougher areas.  Let’s say you want to buy a cabin in Big Bear and rent it out when you are not using it.  Is your Realtor from Orange County going to know what the best rental areas are?  How is your Realtor from Los Angeles going to answer the question when asked what a “Stop and Waste Valve” is?  Chances are the down the hill Realtor is not going to know enough about the Big Bear area to be able to provide you with good advice.  Is your down the hill Realtor going to be able to advise you on how to winterize your cabin?  Chances are he won’t even know that it is something you need to do in Big Bear.

How can you tell if you’re “Down the Hill” Realtor really cares about you getting the best deal you can in Big Bear?

The best thing your down the hill Realtor can do in a situation where you want to buy a home in Big Bear is to refer you to a local Big Bear agent.  The chances of you finding the perfect cabin in Big Bear increase 100% for you if you are referred to a local Big Bear agent who knows the area and also knows the inventory.  The local Big Bear agent is going to be able to advise you and what homes would be good properties to buy and flip.  The local Big Bear agent is going to have access to the local Multiple Listing Service and know what the best deals are.  The local Big Bear agent is going to know the best rental areas as well as some of the better areas to live in.  If your friend who sold you your home in Newport Beach is really a friend, he will refer you to a local Realtor in Big Bear. 

Even though I have a CA Real Estate license and am licensed to sell Real Estate anywhere in the state of California, you won’t see me selling  property in any area other than Big Bear.  The reason for that is I am an expert in the Big Bear area only.  I know what areas you want to live in and what areas you should stay away from.  Whether you are buying a small cabin in Sugarloaf or buying a home on the lake, I can advise you on what would be best for you.  

Local is the best way to go!

I have nothing against the down the hill Realtors.  I’m sure that they are very good at what they do in their area of expertise.  Just as I’m an expert in the Big Bear Real Estate market, I’m sure that they are also experts in their markets.  I would not go down the hill to try and represent someone in a sale in an area that I don’t know.  I wouldn’t know what areas were good areas, nor would I be able to tell my client that the price offered is a good value for the property.  This is all information that I could learn, but why should I.  I simply refer the client to an expert in the area that they want to buy and I know that my client will be taken care of.  Making sure that my clients are taken care and they get a good value in their purchase is more important to me than the commission.  I’d rather refer it out and collect a small referral fee at the end of escrow than risk selling my clients a property in an area that I don’t know and sticking them with a home that they will regret.

 

If you are interested in property in the Big Bear area, please contact me at tony@tonycard.com or call me at 909 436 8043

So, you want to buy a Short Sale in Big Bear.  My response to that statement is simply why?  Did you know that there are some great deals on bank owned, REO properties in the Big Bear Valley?  Were you aware that there are some home owners who are willing to sell their homes at the REO prices?  Once you have this information, I must ask you again, why do you want to buy a Short Sale?  Listed below are just a few of the reasons people want to buy a Short sale in the Big Bear Valley. 

1.       Buyer thinks that they can get the home at a bargain price

2.       Buyer thinks that the bank will be willing to deal in order to save the foreclosure process

3.       Buyer thinks that the seller will accept any price offered as seller is desperate to sell

4.       Buyer thinks that the Short Sale process is very quick and they can close an escrow in days

5.       Buyer thinks that the low price offered by seller is the price that he will pay to buy property

Let’s take a look at these reasons for thinking that buying a Short Sale in Big Bear is the best way to go.

Buyer thinks that they can get the home at a bargain price.

What a number of people don’t know is that the bank is not going to do anything on a Big Bear Short Sale until they have a valid offer.  Because of this, some agents price their Short Sale properties below their fair market value in a desperate ploy to get an offer on the property.  You must remember this.  The bank is not going to sell the house for less than the fair market value of the property.  If the offered price is not at the fair market value, then the bank won’t accept it.

Buyer thinks that the bank will be willing to deal in order to save the foreclosure process

There was a time when I thought the bank would take an offer if it was close to the fair market value.  I was wrong.  I was selling a home as a short sale in Big Bear for a client and I had a couple of good offers.  The first offer that came in was sent to the bank.  Making a long story short, the offered price was $5,000 below the price given to the house by the appraiser.  The bank gave the buyer the opportunity to step up and increase their offer by the $5,000.  This buyer felt that the bank was not going to walk away from his offer over a $5,000 difference, so he gambled and held firm on his offer.  He was shocked to see the bank walk and reject the offer.

Buyer thinks that the seller will accept any price offered as seller is desperate to sell.

To some degree this is a fair statement.  The seller knows that he or she is not going to see a dime from the sale of the cabin in Big Bear.  So, what does he care if the offer is $20,000 off the asking price?  The thing to remember is that the bank will not sell the house for just any price.  If the potential buyer doesn’t offer the value of the property, then the bank won’t agree to the price.

Buyer thinks that the Short Sale process is very quick and they can close an escrow in days.

Whoever thinks that buying a home in Big Bear, or anywhere else for that matter using the Short Sale process is going to have a quick process is crazy.  Most Short Sales are going to take at least ninety to one hundred and twenty days just to get a response from the bank.  There is nothing short about the process of buying a home in Big Bear through a Short Sale.

Buyer thinks that the low price offered by seller is the price that he will pay to buy property

I’ve touched on this already, so I won’t spend a whole lot of time on this one.  The bottom line is that no matter what the owner wants for the property, the property is not going to sell for less than its actual value

 

Last week I closed an escrow on a home in Sugarloaf CA and had an unusual situation come up.  I thought I would share it with you today as I feel that we can all learn something from it that may help you in the future.

I listed a home in the Big Bear Valley a few months ago as a short sale.  When the seller came to me and asked for help in selling her home, it had been almost a year since he had made a payment.  At first, I was afraid that they came to me too late as the sale date was only 14 days from when they called me.  The first thing that I told the seller was that unless the bank was willing to put a hold on the sale date, there was nothing I could do in 14 days. There was no way I could list the home, get an offer, present it to the bank, negotiate with the Shore Sale Negotiator and close all within the 14 days.  To make a long story short, the bank agreed to give me some time to sell the home as a short sale.

It wasn’t long before I received a full price offer from a local Big Bear agent and the seller accepted the offer in writing. Selling a home as a short sale in Big Bear is no different than selling a home owned by a typical seller. The only difference between the short sale and a retail sale is this.  Once a retail seller signs the offer, we can go right to escrow and open the escrow.  In a short sale offer, the seller signs off on the offer and there is a binding contract between buyer and seller.  The offer is then sent to the bank and it is contingent on the bank’s approval of the offer.

In the situation that I want to discuss with you, the seller read through the offer, noted that the buyer was asking for all appliances and in fact, listed the appliances that they wanted left in the house as part of the offer. Once the seller signs the offer, then we have a binding contract between buyer and seller.

What happens if the seller, after agreeing in writing doesn’t leave all of the appliances?

The buyer was very upset when they took possession of the property and found that some of the appliances were no longer there.  What can the buyer do in a case like this?  The buyer can ask that the seller return the property and point out that it was in the offer and it was signed and agreed to.  That might work if the seller simply over looked the appliance.  But what can the buyer do if the seller refuses to return the said appliance.

The Purchase Contract is between BUYER and SELLER!

The purchase contract is between buyer and seller and if the seller refuses to meet his obligations that are spelled out in the Residential Purchase Contract, then the buyer would have to take the seller to court and get a judgment forcing the seller to abide by the terms of the contract. 

Walk Through

This is a great example of why the buyer needs to do a walkthrough of the property BEFORE escrow closes.  Once the escrow has closed, you lose your leverage with the seller.  You can’t threaten to hold up the escrow if the terms of the contract have not been met because the sale has closed.  I know that Big Bear is a bit of a drive for a number of people who buy cabins up here.  But if you want to do everything in your power to avoid problems like this, then you need to put a day aside and to the walk though about a week before escrow closes

If you have any questions about this blog article, or anything that has to do with Real Estate in Big Bear, please get in contact with me.  It makes no difference if your questions have to do with short sales, REO listings, or retail sales, give me a call or shoot me an email.  I am here to help you!

 

Most people that I speak with are of the mindset that the Real Estate market in Big Bear is a Buyer’s market.  That is far from the truth.  The inventory of homes for sale in Big Bear is over 600 residential units.  Out of that 600 homes, 50 homes are priced right and it is those 50 homes that all of the buyers are looking at.  Because most of the buyers are concentrating on this small list of homes that are priced right, you are going to see multiple offers on them. 

By the time you get round to making an offer on a Big Bear property, you should have a good idea as to what the homes are worth.  It should not matter if the home is being sold by the owner or it is a bank owned REO, you want your offer to stand out as being the strongest offer.  How do you do that?

 

1)      Cash Offers always stand out!

Banks and home owners like to see cash offers.  There is much less chance the deal will fall through on a cash offer.  If you have the cash, then make a cash offer.

 

2)      Offer a good price.

Most banks are making very aggressive offers on their bank owned, REO listings.  If you have the mentality that you’re going to be able to buy the bank owned, REO property for 10% off of asking price, you will never get the property.  If you are looking at buying a REO, you are going to have to offer them asking price if not more if you want to be in the running to get the home.

3)      Shorten Inspection Time Frames

While the California Residential Purchase Contract states that the buyer has 17 days to do his inspections, the bank is going to cut your time periods down to anywhere from 5-10 days.  When you make the offer on the REO property in Big Bear, cut your inspection time frames to a shorter number.

4)      Offer to pay some of the closing costs.

Banks are already losing money and so they are looking at the bottom line.  When you make the offer on the Bank Owned REO in Big Bear, you might offer to pay for things like the NHD, Title Report, and even escrow fees.  The bottom line is all the banks are looking at.  The offer that presents the least amount of risk and provides the highest net is generally going to get the deal.

Because banks like the offers that provide the least amount of risk, they will often take a cash offer over an offer that needs a loan. 

5)      Don’t get Discouraged

You may not get every home that you place an offer on.  But no matter what, don’t get discouraged.  Hang in there, make strong offers and you will find yourself in escrow before you know it.

April 30, 2010 is going to bring an end to the Federal Housing Tax Credit. However, in cases where a sales contract is signed by April 30, 2010, and the home purchase is completed by June 30, 2010 you will still be elegible for the tax credit.

There are always a ton of questions asked whenever I am discussing the Federal Housing Tax Credit with my clients.  So, I thought I would try and answer six of the more common questions asked.

1)     Who is elegible to claim the $8000.00 tax credit?

        First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and on or before April 30, 2010.

2)     What is the definition of a first-time home buyer?

         The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, neither husband or wife owned a home within the last three years

3)    How is the amount of the tax credit determined?

       The tax credit is equal to 10% of the homes purchase price with a maximun value of $8,000.00

4)     Are there any income limits for claiming the tax credit?

        Yes. For sales occuring after November 6, 2009, the income limit for single taxpayers is $125,000; the limit is $225,000 for married taxpayers filing a joint return.

5)     The income limits for claiming the tax credit were raised when the tax credit was extended. Are the higher limits retroactive?

        NO.  The new income limits are only applicable to purchases occurring after November 6, 2009.

6)    How do I claim the tax credit? Do I need to complete a form or application? Are there documentation requirements?

         You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for 2009 returns.

You may have a number of other questions  that pertain to this

I read this article on CNN/money this morning and thought that the information was worth sharing with you.  There are a lot of misconceptions pertaining to who will and who will not get a tax bill after being party to a short sale or Foreclosure.  While this article helps explain a lot of this, I still recommend that you speak with a tax professional and get his or her advice if you are thinking about selling your home as a short sale or you go through a foreclosure.  

Did you lose your Big Bear cabin to foreclosure this year? Did your lender forgive some of your mortgage debt because you sold it for less than it was worth? If so, you could be facing a big tax hit.

It is IRS policy to tax forgiven debt you are personally responsible for as if it is income. Say, for example, your credit card company settled a $10,000 debt for 50 cents on the dollar. You'd have a debt forgiveness of $5,000, which the IRS would count as income, just like your wages. The same policy held true for most mortgage debt until 2007, when Congress passed the Mortgage Forgiveness Debt Act. That ended the liability for many homeowners -- but not all.

In general, if you lose your home in Big Bear, or anywhere else for that matter to foreclosure or short sale, where you sell your home for less than you owe, the IRS won't add insult to injury by counting the difference as income. At least until 2012.

There are four major exceptions to the rule:

1. You did a cash-out refinance and splurged.

Many homeowners took cash out when they refinanced their Big Bear cabins and used the extra dough to pay for new cars, boats or vacations. Say you did that and then got into trouble, losing the house through a foreclosure or short sale. Even if your lender waived the remaining debt, the IRS will treat as income the portion of the forgiven debt that you took out as cash and spent. Only the funds used to actually improve your home won't be taxed. Yes, even if you spent the money on paying off your student loans or credit cards.

The IRS' reasoning is that only the money spent on home improvement actually added to your home's value. And that, presumably, diminished the difference between what you owed on your mortgage and the value of your home when it was foreclosed.

Beware: Some lenders made refinancing offers contingent on homeowners paying off credit card debt, according to Kent Anderson, a Eugene, Ore.-based attorney and tax expert. If you took one of those deals, the refinance money will be reported to the IRS and you will owe taxes on it.

2. You have a home-equity line of credit.

During the boom years, many homeowners tapped soaring home equity to make all sorts of consumer purchases. But the same rules that apply to refinancing also apply to home-equity loans: The IRS will only forgive the tax liability if the loan money was spent improving your home. And, tax experts advise, you'll need to show receipts to prove you did.

3. You lost your vacation home or investment property.

So the market tanked and you lost your vacation home in Big Bear. Unfortunately, if you didn't use it as your primary residence for at least two of the previous five years, you're going to pay the tax man.

More common, however, may be the case of investment properties gone sour. During the housing boom, buying homes for investment purposes soared, accounting for 28% of all sales during 2005, according to the National Association of Realtors. (Vacation homes made up 12%.) And many of these purchases were made with little down payment.

When the bust hit, second home prices cratered. The median price paid for investment properties fell 43% to $105,000 in 2009, from $183,500 in 2005, according to NAR. For vacation homes, the median price paid dropped 17% to $169,000.

If an investor bought a property in 2005 at the median price and sold it in 2009, he could have run up $75,000 or so in forgiven debt. If the investor is in the 25% income tax bracket, that would add nearly $19,000 to their tax liability. Ouch!

4. You owned a multi-million-dollar home.

It may be hard for Americans struggling in this weak economy to sympathize with anyone wealthy enough, at one time, to afford a multi-million-dollar home. But owners losing one could be on the hook for a huge tax bill.

Only the first $2 million in forgiven debt will be voided under the relief act; all the overage is taxable as income.

So, say, for example, you're Scarlett Johansson. You paid $7 million for your Hollywood Hills villa in 2007. (With a 100% mortgage; this is hypothetical, remember.) But now, you have it on the market for $4.59 million.

Say you can't unload it, your movies tank and you have to a short sale. (Hey, it happened to Nicholas Cage; he went into foreclosure.) If you sell it for $4 million, leaving a $3 million balance, the IRS would forgive the first $2 million. But the remaining million? You better hope you have a good accountant and a lot of deductions.

The good news? Even if you fall under any of these four scenarios, you may have a way out, according to Anderson. "If the taxpayer was insolvent at the time of the foreclosure, the forgiven debt can be excluded for tax purposes," he said. "It can also be discharged in a bankruptcy and approved by court order."

And then there is California

While most states follow the IRS lead and don't tax most forgiven mortgage debt, California still makes you pay. The state legislature hopes to change that before April 15, but right now California taxpayers are legally liable for paying state income taxes on forgiven mortgage debt.

The state, which has endured some of the worst price declines and foreclosure rates in the nation, did follow the federal lead when it passed the original debt forgiveness bill, but the state only authorized the relief for the 2007 and 2008 tax years. There have been successive legislative efforts to extend relief through 2009, but none have succeeded.

One attempt at passing an omnibus "conformity" bill resulted in a veto by Gov. Schwarzenegger for reasons having nothing to do with mortgage debt forgiveness. The governor objected to a different provision covering erroneous tax reporting by businesses.

Confusion and anxiety is running high, according to Rocky Rushing, chief of staff for democratic state Sen. Ron Calderon, who is spearheading new legislation. His office has fielded many calls from unhappy taxpayers.

"We've heard about tax bills in the thousands of dollars," he said. 

This article was taken from CNN this morning.  Here is the link to the article.

http://money.cnn.com/2010/04/08/pf/taxes/taxes_mortgage_debt/index.htm

 When you buy a cabin in Big Bear Lake CA. you not only have to come up with the money to make the purchase, but you have some extra expenses in closing costs.  It’s amazing at how quickly these fees’s can add up and many times, you will find a client who is paying cash for a Big Bear property wanting to cut the Title Insurance Expense.  This is the one fee that you do not want to cut...  In most cases, you don’t see this fee being cut, but I have seen it happen.  Don’t cut this expense!

In December of 2009 I closed an escrow on a home that I had listed in the Sugarloaf area of the Big Bear Valley.  While a few issues came up during the escrow, it wasn’t anything to worry about and the deal closed as scheduled.  The buyer was happy; he took possession of the property and moved in and enjoyed Christmas in his Big Bear cabin.  A few weeks after the escrow closed, the new owner received mail from the county of San Bernardino Assessor’s office.  The letter was to inform him that the property could not be placed in his name as there was a deed that had not been signed off by the previous owner. 

How could this happen? 

That was the first of many questions that was asked of me.  How could this have happened?  Wasn’t a title search done on this property when it was in escrow?  Why didn’t this deed show up then?  What is being done to correct this problem for the new buyer?  Again, I asked, how could this have slipped through the system? 

No matter what the excuse was for what happened, the bottom line is that there was a Title Insurance policy in place.  You might ask, “What is Title Insurance?”  Whenever you buy a home in Big Bear, or anywhere else for that matter, you normally pay for the Title Insurance policy.  A Title Insurance company will guarantee the title to be free and clear of any liens, clouds on title, or any other encumbrances when you take possession of the property. 

Title Insurance

This is just one of many examples of why you pay for that title insurance policy.  While the Title Insurance companies normally do a very good job, every now and then something slips through.  When something like this does happen, the Title Insurance Company step up and takes care of the situation, no matter what the cost.  While this can be a source of contention, the new property owner can rest assured that the title insurance policy that he paid for will take care of this problem.

One of my clients is a major bank and they have a lot of bank owned, REO properties in Big Bear that they need to sell.  Whenever this bank lists a property for sale, they always list the home at a very agressive price.  Juist last week I listed a home for this bank for $215,000 that had a value of $300,000.00  Within the first 24 hours of listing the property, I had five offers